German media
company EM.TV said Tuesday it has signed a letter of intent to sell a
U.S. investor group a 49.9 percent stake in the Jim Henson Co., creator
of Kermit the Frog and the Muppets.

Dean Valentine,
former president of Walt Disney Television, Walt Disney Television
Animation, and UPN chief executive wants to bring the Muppets back
to the forefront.

EM.TV, which
bought the Jim Henson Co. and rights to the Muppets in February 2000 for
$680 million in cash and stock, said it expected a final agreement next
month on the sale of the stake to the group, led by former UPN president
Dean Valentine and investment company Europlay Capital Advisors.

EM.TV has
not publicly named a price, and declined to comment Tuesday on the value
of the deal.

The German
company said that following the sale Valentine, who stepped down earlier
this year as head of UPN, would be in charge of operations at the Los
Angeles-based Jim Henson Co.

Valentine's
management team also includes Mort Marcus, formerly chairman of Miramax
Television and Video, and Nick Van Dyk, former executive vice president
of Artisan Entertainment.

"We
are committed to continuing the legacy of creativity, humor and humanity
that marked everything Jim Henson touched," Valentine said in a statement.
"At the same time we feel there is enormous potential for growth,
not merely from Kermit and the Muppets, but from the expansion of the
Henson brand into all areas of family entertainment."

Werner Klatten,
EM.TV's chief executive, stressed that his firm "will remain as the
majority owner of the Jim Henson Co. and will continue to have an important
presence in the U.S. market." EM.TV will remain the company's international
distributor.

EM.TV
was founded in 1989 and became a star of Germany's tech-heavy Neuer Markt.
But dramatic moves such as buying the Jim Henson Co.  and, one month
later, half of Formula One motor racing  proved flawed, piling up
debt and leading to a loss of 2.8 billion marks (now US$1.4 billion) in
2000.

Munich-based
EM.TV's stock hit a peak of 109.59 euros in February 2000. It closed Monday
at 87 euro cents (US$0.89) on the Frankfurt exchange.

In May last
year, EM.TV said it was considering selling the Jim Henson Co.

Aside from
being financially strapped, the company said at the time it was also finding
it too difficult to manage the Jim Henson Co.'s production studios in
the United States from its headquarters in Germany.

EM.TV said
Tuesday that the sale of a minority stake would allow it to finish paying
back a loan that financed the acquisition of its stake in Junior TV, a
joint venture with the now-bankrupt KirchMedia.

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